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A record number of Kentuckians applied for unemployment insurance amid a widespread shutdown of bars, restaurants and in-person employment in March. We exposed the state's missteps in administering that program.

Well-Connected Unemployment Director Quietly Fired Amid Crisis

Erica Peterson

Like thousands of other Kentuckians over the last few months, Travis Powell just wanted a simple answer from the state Office of Unemployment Insurance.

Powell is not an unemployed worker; he’s vice president of the Council on Postsecondary Education, and he wanted to know what to tell state universities about how to handle unemployment claims from work-study students. On April 20, he was put in touch with Muncie McNamara, the executive director of the Office of Unemployment Insurance.

According to emails obtained through an open records request, McNamara said he’d look into it. After a week went by with no answer, Powell followed up again. McNamara never responded, and after another week, Powell learned why: McNamara was no longer working for the state.

The head of the Office of Unemployment Insurance was quietly fired on May 5, amid an unprecedented number of jobless claims, a race to overhaul an archaic computer system and a belatedly-reported data breach.

McNamara had been on the job only four months. The 38-year-old lawyer from Nelson County had no experience with unemployment systems or state government before taking the job.

But what he did have was connections.

89.3 WFPL News Louisville · Well-Connected Unemployment Director Quietly Fired Amid Crisis

He volunteered for and donated to Gov. Andy Beshear’s campaign last year. His wife, a recent chair of the Nelson County Democratic Party, considers Lt. Gov. Jacqueline Coleman “a good friend,” according to an interview she gave to the Kentucky Standard.Coleman called McNamara to offer him the job personally, he said.

He was paid $15,000 more than his predecessor, a career unemployment official who the cabinet kept on staff as a special assistant.

But by early May, he was gone, fired “without cause,” according to his personnel file.

McNamara alleges he was fired for raising serious concerns about corners the office was cutting amid the rush to fulfill record-high unemployment claims.

In an emailed statement, the Cabinet for Education and Workforce Development disputed that claim, saying the concerns he raised were not a factor in his firing.

Travis Powell is still waiting for an answer to the question he asked McNamara on behalf of the state’s universities back in April. He said he’s happy to be patient. But for the over 68,000 Kentuckians whose claims have gone unresolved since the pandemic began — including over 5,000 who filed claims back in March — patience doesn’t pay the bills.

Donor, Volunteer And Friend Of Campaign

McNamara moved to Kentucky in 2011, after he and his wife, Audrey Haydon, met in Washington, D.C. The two settled in Bardstown, her hometown, and began practicing law with Haydon’s father at the firm McNamara and Haydon, handling mostly social security and workers compensation cases. They also became involved in Democratic politics.

Haydon was in the 2012 class of Emerge Kentucky, a training program for Democratic women who want to run for office. In 2014, she ran for the state House of Representatives, but lost to incumbent Republican David Floyd.

Another Emerge Kentucky alumna also ran for office that year: Lt. Gov. Jacqueline Coleman, who lost her House race in the district adjacent to Haydon’s. An MSNBC story from the time paired Coleman and Haydon, as well as other Emerge Kentucky alumnae, as Democratic women to watch.

Before becoming Lieutenant Governor, Coleman was a high school basketball coach and assistant principal at Nelson County High School. She founded a non-profit for college-age women, Lead Kentucky, that’s modeled after Emerge Kentucky.

Haydon went on to chair the Nelson County Democratic Party, and when Coleman was named Beshear’s running mate, Haydon heaped praises on her friend. She told the Kentucky Standard that Coleman was “incredibly smart, a hard worker and excellent campaigner.”

“I think she’s a great pick for Andy,” Haydon told the newspaper. “She brings a lot of experience to the ticket that he doesn’t have.”

McNamara donated $2,000, the maximum allowed under state law, to the Beshear/Coleman campaign during the primary and another $2,000 during the general election. He declined to comment on any personal relationship with Coleman.

“I did knock on a lot of doors for the campaign and help raise money for the campaign, which, you know, a lot of people did,” he told KyCIR. “We weren't, obviously, the only ones.”

He applied to work for the administration generally; his application says his preference was to work in legal services for either the Cabinet for Health and Family Services or the Public Protection Cabinet. 

But when Beshear named Coleman secretary of the Education and Workforce Development Cabinet, she called McNamara personally to offer him the job of executive director of the state’s unemployment office.

J.T. Henderson, executive director for communications at the cabinet, confirmed that Coleman and Haydon have been friends for several years, and that he supported the campaign.

“That support did not factor in Mr. McNamara’s hiring,” he said. “He had previous public service in Maryland and had practiced in Social Security disability, workers’ compensation and personal injury.”

Back in January, McNamara told the Kentucky Standard that he was excited for the change of pace the new job would bring.

“I’m looking forward to having some time off from the actual practice of law, doing something different for a little bit,” he said.

McNamara was hired at $85,000 a year, with a 5% raise promised after six months. His predecessor, Katie Houghlin, made $70,000 in the same job.

Houghlin became executive director in 2018 after 16 years in the cabinet. She was moved to a special assistant role within the cabinet when the Beshear administration came in. McNamara characterized it as a promotion, though Houghlin didn’t get a pay increase. She declined to comment.

McNamara told KyCIR he had no direct experience with unemployment systems before taking this job. When he came on in January, the agency was handling 3,000 claims a week. But then, coronavirus came to Kentucky, and both McNamara and the office he was leading were thrown into the deep end.

“What I had to learn, I learned very quickly,” he said. “There was a learning curve at the beginning, but I feel like I got up to speed very, very quickly.”

Unemployment Meltdown

On March 26, per an executive order from Beshear, all non-life sustaining businesses closed their doors to slow the spread of coronavirus. Almost immediately, unemployment claims spiked. 

The state expanded unemployment benefits to independent contractors and the self-employed. As a result, they had to reprogram a flawed, decades-old computer system to accept applications it was designed to reject. By the end of March, the office was processing more than 113,000 claims a week.

Applicants had trouble reaching a live person as phone lines jammed up. In April, the agency hired a thousand new employees to answer phones;by June, they’d let most of them go, saying they weren’t able to train them to properly help claimants. 

“The job I accepted and the job I ended up doing were totally different,” McNamara said. “No one saw COVID-19 coming.”

Deputy Secretary Josh Benton started attending Beshear’s daily press conferences to answer questions about the unemployment delays. Benton is senior to McNamara and his boss, the Commissioner of Workforce Investment Marty Hammons, neither of whom ever made an appearance or were mentioned at the daily briefings.

On April 23, a data breach occurred, and some claimants saw personal documents for other applicants. The cabinet did not report the breach as required by law, according to the state auditor and Attorney General.

The breach became a political flashpoint when it eventually was reported, more than a month later. Both Auditor Mike Harmon and Attorney General Daniel Cameron have publicly condemned the Beshear administration for failing to prevent or disclose the breach, and have called for more transparency.

“We are deeply troubled by the Beshear Administration’s failure to disclose the security breach in a timely manner, as required by law,” Cameron’s spokesperson Elizabeth Kuhn said in an emailed statement. “This unexplained delay and astonishing lack of transparency increased the risk of potential identity theft and further compromised the personal and financial information of thousands of Kentuckians.”

McNamara declined to comment on the data breach, but said he had started raising flags within the agency about similar concerns before he was fired.

“I'm sure that I made people unhappy while I was there, by pointing out issues and concerns I had,” he said. “However, when I saw problems or potential problems, I felt obligated to point them out.”

He said he raised concerns about many issues: data security, conflicts of interest, a lack of clear guidelines and standards, compliance with federal regulations and concerns about the management of the unemployment trust fund.

On April 23, he sent a letter to cabinet officials as a "formal protest of agency action." In the four-page letter, he raised concerns about data security in regards to allowing third-party claims workers access to unemployment databases.  Though his initial letter was sent on the same day the data breach was identified, his concerns appear to be unrelated to that incident.

The Cabinet for Education and Workforce Development responded on April 28.

The response from the cabinet strongly disputes many of his concerns and criticizes him for not raising the issue earlier or in a different venue.

He was fired a week later, without cause, according to the termination letter in his personnel file. He has hired an attorney and filed an appeal with the Personnel Board.

In the appeal, McNamara alleges he was fired for raising these data security concerns, as well as ethics concerns about appointments to the Unemployment Insurance Commission. The appeal also says he may have been discriminated against for a medical condition: his cardiologist ordered him to stay home from work for three days due to a health condition. When he returned, he was terminated.

He was replaced temporarily by Stefanie Ebbens Kingsley, an unemployment lawyer from Whitley County. She had been hired in mid-March as executive advisor to the Office of Educational Programs, and she became interim executive director on May 16.

Like Coleman and Haydon, Ebbens Kingsley is an Emerge Kentucky alumna; she now serves on the organization’s board. She also ran unsuccessfully for a House seat, losing to Republican incumbent Regina Bunch Huff in 2018.

In late June, she returned to her old job as executive advisor, records show.

Beshear then appointed Labor Secretary Larry Roberts to run the Office of Unemployment Insurance, according to Marjorie Arnold, Chief of Staff of the Kentucky Labor Cabinet in an emailed response to questions.

In an email, Beshear’s office said he was not involved in the hiring or firing of McNamara. After this story was published on Monday, Beshear said during a press conference that McNamara’s contributions to the campaign did not factor in his hiring.

Beshear said McNamara’s years as a practicing lawyer was good experience for a position in state government, but that the hiring decision ultimately was made by the Education and Workforce Development Cabinet. “Certainly with it being messy in the end, I think everybody wishes the situation either hadn’t happened or turned out how it is,” Beshear said.

Many Republicans have called for continued accountability for both Beshear and Coleman for how this crisis has been handled. The legislature has held several hearings about the continued delays and some of the measures the cabinet has undertaken to try to catch up.

“Andy Beshear puts politics first every chance he gets – even as Kentuckians suffer,” Republican Party of Kentucky spokesman Mike Lonergan said in an emailed statement. “As the (unemployment) backlog piled up, Beshear blamed everyone but himself … Meanwhile, one Beshear political appointee after another left Kentucky’s unemployment office in complete disarray while Kentuckians suffered.”

'We're about to be on the street'

In the months since McNamara’s firing, the Office of Unemployment Insurance has continued to struggle to pay claims in a timely manner. 

Arnold, of the Labor Cabinet, said Kentucky has processed over 90% of its unemployment claims amounting to over $3 billion in relief. “But no one in state government will be satisfied until all Kentuckians have received the unemployment benefits for which they qualify,” Arnold said.

On June 16, thousands of people descended upon Frankfort to protest the delays. The cabinet set up impromptu offices to handle the protesters' claims one-on-one, and the lines stretched across government parking lots in the 81-degree heat. People came from across the state over the next several days hoping to see their claims similarly resolved.

The agency has now set up these one-on-one meetings across the state, but appointments are already booked through September.

The state recently announced a $7.6 million contract with consulting firm Ernst and Young to provide manpower to help resolve outstanding claims.

A week after the protests, the state applied for a $865 million loan from the federal government in order to keep paying out unemployment claims.

Records reviewed by KyCIR show people waiting for their money — some who had filed claims way back in March — have emailed officials from across state government directly with desperate pleas for assistance.

One person from Paducah wrote Ebbens Kingsley to try and get their claim resolved two months after it was submitted.

“I haven’t been paid anything. I have a two year old and three week old, we’re about to be on the streets if I don’t get paid by the end of next week,” the email said. “I know you get thousands upon thousands of emails daily and I also know I’m not special when it comes to this, but please fix my unemployment as soon as you can.”

But among those unemployed workers who have managed to get their benefits? Muncie McNamara, who once headed the agency that is now signing his checks. He said he’ll “readily admit” that he applied for benefits. 

McNamara said that’s why he took the job in the first place — he believes government should be there for people when they hit hard times.

Note: This story was updated at 5 p.m. Monday to include comments from Gov. Andy Beshear. Contact Eleanor Klibanoff at eleanor@kycir.org. Contact Jared Bennett at jbennett@kycir.org.

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